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Dis-Chem points to solid earnings as it resumes dividends

Pharma retailer Dis-Chem Group on Friday (21 May) reported a 9.6% increase in revenue for the year ended February 2021, despite the deepening economic recession in South Africa.


Staff Writer | Business Tech

Earnings attributable to shareholders and headline earnings increased by 11.8% over the corresponding period, while headline earnings per share of 77.8 cents increased by the same amount.

Retail operating profit was R1.2 billion and the wholesale segments performance continued to improve reporting an operating profit of R65 million, Dis-Chem said.

Retail revenue grew by 7.6% to R23.4 billion with comparable store revenue at 2.7%. The group opened 22 new stores, including 3 Mediclinic stores, and acquired two new pharmacies during the year, with 194 stores at the end of February 2021. These new stores contributed R491 million to revenue, the group said.

The group said it has reinstated its dividend policy through a gross final cash dividend of 31.1 cents per share.

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Capital expenditure on tangible and intangible assets of R401 million comprised R311 million of expansionary expenditure as Dis-Chem said it invested in additional stores as well as information technology enhancements across both the retail and wholesale segments, including R88 million in SAP software licences.

The balance of R90 million relates to replacement expenditure incurred to maintain the existing retail and wholesale networks, it said.

Baby City

Dis-Chem said that Baby City has contributed R128 million to revenue in January and February 2021, 0.6% of the retail revenue growth.

The Group acquired 100% of Baby City on 1 January 2021 for R422 million. Baby City is a specialist destination baby retailer that operates a network of 33 stores across South Africa.

“All Baby City stores have completed the migration onto the Group’s common technology platform. This was a necessary first step to enable the extraction of the planned synergistic benefits across both brands. Baby City contributed R128 million to Group revenue for the period ended 28 February 2021,” Dis-Chem said.

Covid vaccinations

For the 10 weeks to 10 May 2021, the group’s revenue increased by 12.6% over the prior comparable period. Dis-Chem reiterated its commitment to partnering with government to fight the Covid-19 pandemic.

Since 17 May 2021, Dis-Chem said it has been vaccinating over 60s and its healthcare workers. The group has secured 32 dedicated vaccination sites, 11 of which will commence administration of vaccines to the public its from 24 May 2021. Additional capacity from in-store clinics will be added, when the J&J vaccination becomes available, it said.

Operating at full capacity, the Group will be able to administer up to 800,000 vaccines per month.

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